If you like cars, what is a reasonable car price based on income

[Anonymous]

We are all familiar with the 28-36 rule for housing.
The 28-36 rule states that your maximum household expenses shouldn't exceed 28 percent of your gross monthly income Likewise, total debt, which includes everything from student loans to credit cards, should fall below 36 percent of your income.
Another rule of thumb is that your house should not cost more than 3x your annual gross salary.
Is there such a guideline or rule of thumb for cars? If you like cars, what is a reasonable car price based on your income.

If you don't like cars, please don't respond. We already know you wouldn't buy a car, or you would buy the cheapest box that has 4 wheels and can go from A to B.

[Anonymous]

Suze Orman said that a car loan should be for no more than 3 years - so whatever you can afford to pay off within 3 years.

[Anonymous]

I think this depends on age, and also on assets.

You should figure out what your financial goals are and what savings rate you need to hit to get there. Then look at all your standard everyday expenses. The gap is your discretionary funds.

If you want to spend your discretionary funds on a fancy car, knock yourself out. But you are in that case choose the car as one form of responsible consumption at that point.

Also, I would give young people just starting out a break, but once you are over 40 you really should just be purchasing cars with cash (unless you are just getting out the loan purposefully for leverage). So at that point, however much you can throw down without breaking a sweat.

[Anonymous]

We usually do four-year loans, but three seems reasonable too. What can you afford over 3-4 years that won't push your overall debt over 36%? That's a good place to start. Take insurance into consideration since that does go up with the price of the car.

I don't think income has too much bearing on it beyond basic affordability. If you make at least $100K and don't have other big financial obligations, you can spend a decent amount on a car if you so choose, and there's a point at which car prices more or less max out (assuming you aren't shopping for sports cars or Teslas). You can spend a lot or a little depending on what you're looking for in a car. Whether that's what you want to do with your discretionary income over other options is really up to you.

[Anonymous]

Anonymous wrote:We are all familiar with the 28-36 rule for housing.
The 28-36 rule states that your maximum household expenses shouldn't exceed 28 percent of your gross monthly income Likewise, total debt, which includes everything from student loans to credit cards, should fall below 36 percent of your income.
Another rule of thumb is that your house should not cost more than 3x your annual gross salary.
Is there such a guideline or rule of thumb for cars? If you like cars, what is a reasonable car price based on your income.

If you don't like cars, please don't respond. We already know you wouldn't buy a car, or you would buy the cheapest box that has 4 wheels and can go from A to B.

people who like cars lease, not buy.

Roughly $250 per month per $20,000 of list price. Something like an S550 comes out to 15k a year. An international family vacation costs 30. It's about priorities.

[Anonymous]

Anonymous wrote:We are all familiar with the 28-36 rule for housing.
The 28-36 rule states that your maximum household expenses shouldn't exceed 28 percent of your gross monthly income Likewise, total debt, which includes everything from student loans to credit cards, should fall below 36 percent of your income.
Another rule of thumb is that your house should not cost more than 3x your annual gross salary.
Is there such a guideline or rule of thumb for cars? If you like cars, what is a reasonable car price based on your income.

If you don't like cars, please don't respond. We already know you wouldn't buy a car, or you would buy the cheapest box that has 4 wheels and can go from A to B.

I think 3 months gross salary makes sense. Look at the numbers:

- Family making 20k HHI, should be looking for fairly old but reliable cars that cost less than $5000.
- Family making 40k HHI, should generally be limiting themselves to used cars that cost less than $10,000
- Family making 100k HHI, a new car for $25k works well.
- Family making 200k HHI, a fancier luxury car for $50k.

[Anonymous]

Dave Ramsey: Total ownership of vehicles (Anything with an engine to include boats or ATVS) should be no more then 50% of Annual pay. Pretty good benchmark I think.

https://www.daveramsey.com/askdave/automobiles/how-much-car-is-too-much

[Anonymous]

Anonymous wrote:Dave Ramsey: Total ownership of vehicles (Anything with an engine to include boats or ATVS) should be no more then 50% of Annual pay. Pretty good benchmark I think.

https://www.daveramsey.com/askdave/automobiles/how-much-car-is-too-much

50% gross HHI?

[Anonymous]

HHI is $375K. We have two kids with daycare costs and save aggressively for kids college and our retirement - so we don't pay over $50K per car (2 total), and tend to keep them for 8-10 yrs. We currently drive an Audi Q5 and A4

[Anonymous]

Anonymous wrote:HHI is $375K. We have two kids with daycare costs and save aggressively for kids college and our retirement - so we don't pay over $50K per car (2 total), and tend to keep them for 8-10 yrs. We currently drive an Audi Q5 and A4

Lies! No way an Audi will last more than 5 years.

[Anonymous]

Let's ask the question from a different angle - if a family (friend of mine, LOL) has three cars - 04 Odyssey, 05 Pathfinder, and 09 Accord, how much would you say HHI should be?? Just for fun folks.

[Anonymous]

Anonymous wrote:

Anonymous wrote:HHI is $375K. We have two kids with daycare costs and save aggressively for kids college and our retirement - so we don't pay over $50K per car (2 total), and tend to keep them for 8-10 yrs. We currently drive an Audi Q5 and A4

Lies! No way an Audi will last more than 5 years.

I'm convinced that the extent to which Audi models resemble each other and from one generation to the next contributes to a positive image of longevity.

[Anonymous]

Anonymous wrote:Let's ask the question from a different angle - if a family (friend of mine, LOL) has three cars - 04 Odyssey, 05 Pathfinder, and 09 Accord, how much would you say HHI should be?? Just for fun folks.

Depends on when the cars were bought, I guess. If these were purchased in the past 1-2 years, I'd say the HHI needs to be at least 70k or higher.

[Anonymous]

No more than 10% of your HHI. The more you make, the lower the percentage should go (unless you're a car person and fancy expensive cars bring you joy, but still don't exceed 10%).

[Anonymous]

Anonymous wrote:No more than 10% of your HHI. The more you make, the lower the percentage should go (unless you're a car person and fancy expensive cars bring you joy, but still don't exceed 10%).

So...240k= 24k or lower? Lol